In 2020, we’ve been subjected to a non-stop barrage of bad news about the economy, from contracting Gross Domestic Product (GDP) growth to talk about the worst recession since independence.
On Monday (23 Nov), however, the Ministry of Trade and Industry (MTI) released its GDP growth forecast for 2021, and the outlook was surprisingly positive.
Positive in that our GDP growth will actually be in the positive range of 4% to 6% next year.
Central to that will be our aviation and tourism industries, which are expected to recover gradually after a horrible year.
First, the bad news.
In a media release on Monday (23 Nov), MTI revealed what we all expected — GDP growth for 2020 will be in negative territory.
Specifically, MTI predicts it to be in the range of -6.5% to -6%, narrowing from the -5% to -7% it forecast in Aug.
The industries with the highest drops were the:
However, Singapore’s economy rebounded in the 3rd quarter compared with the 2nd quarter, as the country reopened activities after the ‘Circuit Breaker’.
It also helped that major global economies also emerged from lockdowns.
The good news is that Singapore’s economy is projected to grow by 4% to 6% in 2021, MTI forecast.
However, this recovery is “expected to be gradual”.
It will depend on:
In terms of the global economy, China is set to be one of the strongest-performing countries.
The Asian superpower is “expected to maintain a robust pace of growth”, due partly to its strong investment spending and high credit levels.
GDP growth in ASEAN, especially in Malaysia, Thailand and Indonesia, is also expected to pick up, MTI said.
However, the outlook in the West isn’t as good, with Covid-19 resurgences prompting more lockdowns and restrictions.
Thus, the United States and Europe will drag down consumer and business sentiments and weigh on the labour market.
However, the improved outlook for key countries should lead to travel restrictions and health measures being relaxed further in 2021.
That should be positive for the badly hit aviation and tourism sectors in Singapore.
With relaxing of travel restrictions come a gradual recovery in air passenger volumes and visitor arrivals, which should go some way in boosting airlines.
With more tourists also come increased spending on tourism.
Besides these industries, consumer-facing sectors like the retail trade and food and beverage segments will also benefit from the return of tourists to our shores.
However, MTI cautioned that the economic activity in these sectors probably won’t return to the the level seen before the pandemic, even by the end of 2021.
However, economic activity in these sectors is not likely to return to pre-COVID
levels even by end-2021.
While we’re glad that Singapore’s economy is on the recovery track, it really depends on the Covid-19 situation here as well as around the world.
And that’s immensely unpredictable. We’ve seen how a hoped-for opening of a travel bubble between us and Hong Kong was derailed at the last minute due to a surge of cases in the Chinese city.
Let’s hope for the best, but not rejoice too soon.
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Featured image adapted from MS News.
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